New California high-speed rail business plan gets first public airing

The latest business plan for California’s embattled high-speed train project endured its first volley of slings and arrows this week when a draft of the document was presented to the state’s High-Speed Rail Authority board in Sacramento.

The latest business plan for California’s embattled high-speed train project endured its first volley of slings and arrows this week when a draft of the document was presented to the state’s High-Speed Rail Authority board in Sacramento.

The 101-page document, hot off the press from its release Friday, lays out the latest estimates for the cost to build the first 520-mile phase of the bullet-train line between San Francisco and Los Angeles, as well as ridership, revenue from fares and long-term operations and maintenance costs. The draft 2014 business plan is subject to 60 days of public comment before a final version is sent to the Legislature by May 1.

The rail agency’s CEO, Jeff Morales, described the plan as “a progress report” as the authority anticipates the start of construction on its first section of the rail line in the Madera-Fresno area this year.

“This plan is more of an update” to the authority’s 2012 business plan, Morales told the board Tuesday, adding that it integrates two years’ worth of comments from government agencies, academics, critics and international rail experts.

“We’ve gone out to obtain the best thinking in the world about how to move forward with this program,” Morales said.

The plan estimates it will cost $67.6 billion to build the San Francisco-Los Angeles phase and to buy trains. That’s about 1 percent less than the $68.4 billion estimate from the 2012 business plan. Compared with the 2012 plan, the new version forecasts higher ridership, lower revenues from ticket sales and higher operation and maintenance costs.

“Higher ridership means more trains running, so that’s more (operations and maintenance) costs,” Morales said. Still, he said computer simulations indicate that ticket revenue will be enough to cover the system’s operating costs without a government subsidy. “We can say that with as close to 100 percent certainty as anyone can get,” he said.

Running without a subsidy is a key requirement of Proposition 1A, a $9.9 billion high-speed rail bond measure approved by California voters in 2008.

But there are plenty of skeptics who question the business plan’s conclusions. Several spoke at Tuesday’s meeting.

“I think this business plan is pretty much incomprehensible to anyone who isn’t following this process closely,” said Kevin Dayton, CEO of Labor Issue Solutions in Roseville.

Dayton criticized the plan as “fuzzy” in addressing problems confronting the project. “It’s better for the board to be frank about the uncertainties and challenges you’re facing,” he said. “I think the business plan needs to be redone so the ordinary voter can understand what you’re talking about.”

Ted Hart, who lives in Rancho Murieta east of Sacramento, took the authority to task for providing a cost estimate for the 520-mile San Francisco-Los Angeles line, but not for future extensions to Sacramento and San Diego – the full 800-mile system originally called for in Proposition 1A.

“All of these figures conveniently avoid the cost of the entire 800-mile system,” Hart said. “The total cost just got lost somewhere along the line.”

Hart said the arithmetic for the Los Angeles-San Francisco line works out to an average cost of about $130 million per mile. By applying that to the Phase 2 extensions to Sacramento and San Diego, “we have a cost for the entire system of about $104 billion,” he said. “If you don’t want to use that number, then put something in the business plan to tell us the cost of the entire system.”

David Schonbrunn of Sausalito, who heads an organization called Transportation Solutions Defense and Education Fund or TRANSDEF, declared that “this can’t possibly be considered a business plan (because it has) no concrete details on filling a $21 billion hole” – the difference between the $6 billion the agency has available now (from a combination of federal transportation and stimulus money and state bond funds) and the estimated $32 billion cost to build the first planned operating segment between Merced and the San Fernando Valley.

Schonbrunn said the plan is more like a call to “be on the lookout for a leprechaun with a pot of gold.”

Morales defended the plan as a realistic forecast. “We are doing, by every expert independent analysis, what is best practice,” he said. “We are putting forth the best numbers that we can, with the best analysis that we can. The external validation speaks loudly.”